After joining Blue Cross Blue Shield of Wisconsin as its CIO, Terry Knecht inherited an IT department that was $8.6 million over budget. After introducing some discipline — in the form of an IT tracking system to fix the insurance company’s broken chargeback process — he was well on his way to reducing his department’s budget by 20%.
This was the first of many efforts Knecht took to bring his department in line with the company’s business goals. And that is the crux of IT governance.
When implemented correctly, IT governance keeps IT organizations focused on the right projects. It makes them more efficient at executing those projects, and it forces better tracking of assets and resources.
IT governance should also mean that a company has brought business know-how into its IT group. A company
that has successfully implemented an IT governance program will no longer have an IT shop that operates as if it is on its own island.
Gartner Inc. describes IT governance as a set of principles that guide decision-making and accountability to encourage desirable behaviors in the use of IT. These guidelines help IT shops to set strategic directions, establish standards and prioritize investments.
IT governance should always strive for:
this give the IT department an air of unreliability, it generally costs money.
Learning how to stay on track requires much communication between the IT staff and the folks on the business side of the house, says Dom Gugliotti, IT project manager at Berlin, Conn.-based Northeast Utilities.
But adhering to timelines is only one practice in successfully getting through massive IT projects. Project managers also must strive to create realistic expectations for business executives.
Barry Cohen, vice president of applications management at Wells Real Estate Funds in Norcross, Ga., says gauging expectations is often challenging because business managers often fail to understand the effect IT projects will have on their operations. With that in mind, Cohen strives to communicate
• Alignment of IT and business goals
• Effective and efficient use of IT assets and people
• Reduction of risk due from lost data or misused resources
• Transparency of IT operations
alignment
and governance
It’s safe to say there are a large
percentage of companies that
do not really know whether
their IT and business goals are
truly aligned. To find out, Troy
Kinsey, who teaches at the Uni-
versity of California, Berkeley
and the University of Southern
California, recommends looking at processes, metrics and employee development.
IT departments that are aligned with their company’s business goals have cross-departmental processes for prioritizing, approving and implementing IT projects that add value, Kinsey says. Companies also need a consistent measuring stick for return on investment regardless of whether a project originates on the business or the IT side of the house.
If a company is not supporting cross-departmental training or mentoring, then it is probably not truly aligned. Having employees from different sides of a company better understand each other’s challenges is a critical tool in aligning IT to business.
CIOs must remember that “alignment is a moving target, not a permanent condition,” says Barbara Golmolski, an analyst at Gartner.
But aligning goes beyond measurements, mind-sets and training. There are helpful tools in the market that allow IT professionals to reach this goal. It was a project and resource tracking system that Knecht deployed at Blue Cross Blue Shield of Wisconsin to eliminate his group’s $8.6 million budget deficit. See “The Fixers: Turnaround CIOs” on p. 6 to learn more about tools CIOs have deployed to better align their IT shop and business.
reducing risk Successfully implanting IT governance also means reducing your company’s risk. One risk that all IT shops would like to avoid is missing deliverables on big IT projects. Not only does
actionable: They facilitate
decision-making and guide
behavior.
succinct: They are focused.
specific: They have possible
counterarguments and repre-
sent a choice the organization
has made.
clear: The repercussions of
following or not following the
principles should be articulated.
relevant: They should be ap-
propriate to specific business
contexts in a company.
SOur CE; Gar TnEr InC., 2006
Computerworld editor in chief: Don tennant ■ Online projects editor: Joyce carpenter
Executive summary author: Denise Pappalardo O’connors ■ Managing editor/production: Michele Lee Defilippo
Copy editors: Bob rawson, Eugene Demaitre, Monica sambataro, Donna sussman ■ Design and online production: iDg Online Publishing group
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